1MDB board of directors offers to resign after PAC report

The  board of directors of 1Malaysia Development Bhd (1MDB) had on Thursday morning collectively decided to offer its resignation to MoF Inc., which is the 100% shareholder.

1MDBpic

The board said on Thursday this had been a difficult decision to take but “we believe is the right thing to do, given the circumstances, in order to facilitate any follow-up investigations as recommended by the PAC (Parliamentary Public Accounts Committee).”

Earlier on Thursday, the  PAC had tabled the 106-page report on 1MDB  in Parliament. It  found that former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi should be held responsible for the “weaknesses and constraints” faced by the state investment arm.

“We urge the authorities to conduct an investigation on Shahrol and those related,” said the PAC in a 106-page report.

Below is the statement released by the board of 1MDB:

The Board of Directors of 1Malaysia Development Berhad (“Board”) notes the contents of the Public Accounts Committee Report on 1MDB as tabled in Parliament this morning (“PAC Report”). The Board views the PAC Report as a comprehensive and conclusive document, which has clearly established various facts and has dispelled numerous allegations about the company.

The PAC Report has identified a number of weaknesses in the governance and decision-making of 1MDB. With the benefit of hindsight, we can understand how the National Audit Department and the PAC could find such lapses and shortcomings. However, it is important to understand that the decisions were made in the context of specific transactions at that point in time. Furthermore, 1MDB is a complex company, with multiple roles of undertaking large strategic projects, establishing collaboration with foreign government entities and attracting foreign direct investment (FDI) to Malaysia.

It is now well known that 1MDB only had RM 1 million cash equity, which necessitated a heavy dependence on borrowings to fund investments. Notwithstanding this challenge, the Board has done its best to manage the company in a way that would not be a financial burden to the Government.

In particular, the moment a cash-flow mismatch was identified in November 2014, the Board acted immediately to appoint a professional restructuring specialist to lead 1MDB. This led to a strategic review being conducted, which resulted in the success of the on-going rationalisation plan that has resolved 1MDB’s debt burden. The company has paid and will continue to pay off all its short term debt and all its bank debt with the proceeds from the successful sale of Edra, and currently has a cash surplus of approx. RM2.3 billion to meet future interest payment and infrastructure finance requirements.

The Board believes it has carried out its role and responsibility to the best of its ability, including the implementation of various corporate governance measures such as establishing standard operating procedures for the company and setting up a Board audit and risk management committee. In addition, the Board has ensured full cooperation with all the lawful authorities investigating the company. All supporting documents that were available have been duly submitted.

More importantly, the funds of 1MDB have been fully accounted for and there is no case of “RM 42 billion missing”, as has been alleged by some irresponsible parties. It has also been confirmed that 1MDB did not transfer RM 2.6 billion to the personal accounts of the Prime Minister as had been alleged.

The Board has successfully steered 1MDB through a uniquely challenging period and trusts that, with the release of the PAC Report, a line has been drawn. However, given the findings of the PAC Report, the Board has collectively this morning decided to offer its resignation to MoF Inc., the 100% shareholder of 1MDB.

This has been a difficult decision to take but we believe is the right thing to do, given the circumstances, in order to facilitate any follow-up investigations as recommended by the PAC.”

Source:  http://www.thestar.com.my/business/business-news/2016/04/07/1mdb-board-of-directors-offers-to-resignation-after-pac-report/

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